Senate Democrats are urging the Federal Communications Commission and the Antitrust Division of the Department of Justice to closely consider whether T-Mobile’s planned acquisition of Sprint will hurt competition and harm consumers.
In a letter delivered on Monday, Sen. Amy Klobuchar (D-Minn.) spearheaded a group of senators who expressed their concerns to leadership at both agencies. The transaction, they say, would combine T-Mobile, the third-largest wireless carrier in the United States with over 72 million customers, with Sprint, the fourth-largest wireless carrier with over 54 million customers, reducing the number of wireless carriers from four national competitors to three.
The letter asks that the Justice Dept. and FCC carefully consider: the effect of reducing the number of national wireless carriers from four to three; how the proposed merger would affect lower-cost options for wireless service; whether specific regions, particularly rural areas, would be disproportionately affected by the proposed transaction; and the proposed transaction’s likely effect on innovation of wireless networks and other technologies.
Co-signing the letter were senators Richard Blumenthal (D-Conn.), Mazie Hirono (D- Hawaii), Tina Smith (D-Minn.), Tom Udall (D-N.M.), Ed Markey (D-Mass.), Elizabeth Warren (D-Mass.), and Bernie Sanders (I-Vt.).
“As more than three-quarters of American adults now own smartphones, including many who depend on these devices for their primary connection to the internet, an anticompetitive acquisition in the wireless market could result in higher prices for American consumers or force some people to forego their internet connection altogether,” the senators wrote.
The letter points out that both agencies opposed AT&T’s proposed acquisition of T-Mobile in 2011 and raised concerns that reducing the number of wireless carriers would adversely affect competition in the wireless market.
“Now that T-Mobile and Sprint have formally signed an agreement to merge, we urge you to closely evaluate the parties’ arguments concerning the potential benefits of this merger, especially in light of your agency’s previous emphasis on the importance of maintaining four national competitors in the wireless market,” the senators wrote.
In addition to reviewing the nationwide impact of consolidation in the wireless industry, the letter also urges the agencies to examine whether any regions will face disproportionate harm as a result of the proposed merger. “In rural areas, access to reliable cell coverage has a significant impact on local economies and public safety,” they wrote. “A review of the proposed merger should evaluate potential effects on competition and service access in rural areas, particularly those covered only by Sprint and T-Mobile. As the parties are reported to have already executed a roaming agreement that would expand coverage to their customers in the absence of the merger, it will be important to focus on the benefits that can only be achieved as a direct result of the merger.”
The potential effects on wireless network innovation are another important aspect of this transaction, the letter says. “T-Mobile and Sprint claim that the proposed merger will allow them to more quickly build a nationwide 5G network,” the senators wrote. “However, T-Mobile has shown that it is already capable of rapidly creating and expanding a nationwide network independently when it deployed nationwide LTE faster than Verizon and AT&T. The transaction would also eliminate Sprint as an independent force for innovation. In addition, we are concerned that the execution of this merger agreement may discourage near-term incentives to invest in research and development at T-Mobile and Sprint as the two companies focus on navigating the merger review process.”